Ports in Peril
The situation at California’s ports remains grim. Cargo volumes continue to drop at alarming rates. The Port of Long Beach reported the other day a 43% decline of imported cargo for February when compared to the same time period last year. The Port of Los Angeles experienced a similar decrease, continuing their downward spiral with a reported decline for imports of 36%.
The declines in volume translate into a massive drop off in work for longshoremen, truckers, railroads, warehouse workers and others in the supply chain. With close to 500 container ships now idle and not in use, predictions for cargo volumes for the rest of 2009 remain extremely pessimistic.
In addition to the negative impacts of the worldwide recession, Southern California ports have been experiencing a backlash from cargo owners for the development of container fee proposals along with attempts at re-regulating the port trucking industry. This rejection has manifested itself in the diversion of cargo from California ports prior to the economic collapse – something which continues to this day.
Situation Bleak for California’s Ports
No water for showers. Government in chaos and broke. Schools being shut down. Roads and bridges falling apart and in disrepair. All that is missing in California is an occupying force.
The bleak political news out of Sacramento is only surpassed by the continued worsening of the global economy and massive decreases in cargo volumes through California’s ports. The Port of Long Beach suffered an incredible 25% drop in volume for the month of December – and the numbers look like they will be worse in 2009. One shipowner recently took delivery of six new containerships – and immediately parked them off the coast of China. Layoffs continue. Longshoremen are without work. Over 200 vessels are idle around the world and at anchor due to the recession and the lack of cargo. For more information about the dire condition at California’s ports, take a look at CalTrade for a complete picture.
Who Needs Representative Democracy Anyway?
To put it politely, Sacramento is dysfunctional. It is something that everyone agrees upon. For over a decade the State has enacted budgets that didn’t make any sense. But since we are a State that is governed by media events as opposed to policy, everyone declared victory. This self induced euphoria usually faded by late summer. And now, with a worldwide recession in full force, the penalty for avoiding their responsibilities as elected officials is coming due – and our elected leaders are paralyzed, impotent and afraid to act (some would say govern).
So how do we change things?
Lots of ideas have been thrown out for discussion recently. Some folks want to eliminate our bicameral system of government and narrow it down to a unicameral system. I would argue that despite having two legislative houses, the operational and political reality is that we already have a unicameral system – but unlike a unicameral system it just takes a bit longer for bills to move through our current system. Given the gracious and courteous practice of not killing bad bills (or any bills for that matter unless you are a Republican), we have in effect a unicameral system in place today. Why mess with perfection?
One Silver Lining on the State Budget Shines Through, With Thanks to the Governor
With all of the talk of political dysfunction and Constitutional Conventions amidst a gathering budget storm and deepening recession, there is at least one good deed from 2008 for which Governor Schwarzenegger should be applauded – with one stroke of a pen, he stopped a multi-million dollar backdoor raid on the General Fund and local government revenues in September when he vetoed SB 974, the Container Tax.
For those unfamiliar with the current state of California’s trade economy, here are a few statistics that may help clarify the current challenges we face – and the "robbing Peter to pay Paul" raid on the General Fund that would have resulted to the current year budget if the latest container tax had been implemented.
Is Anyone There?
International trade moving through California’s ports is in a state of freefall. Cargo volumes continue to decrease. Car imports are being held at the dock with no place to go. Exports, the last bright spot for California’s trade community, are rapidly disappearing. Waste paper and scrap metal, once shipped to countries like China, were recycled and sent back to the United States in the form of product packaging or finished goods. Now that material is headed for landfills. Just a couple of months ago, agricultural exporters couldn’t find enough containers to ship goods overseas because of excess demand for containers.
In the space of two weeks, one ocean carrier saw 38,000 export bookings evaporate – gone. As a result, highly paid longshore jobs are drying up. Dozens of new container ships sit idle in ports like Singapore – a commercial mothball fleet in the making. One ocean carrier recently announced the layoffs of 1,000 people in their North America operations and the closing of their corporate office in Oakland – ending a presence in California that dates back to the Gold Rush era. And it’s only the beginning and it’s going to get worse.
Arrogance Breeds Contempt
Public officials at all levels of government like to go oversees to promote international trade in California. Cynic’s call them “junkets”. Policy makers call them “trade missions.” Economists have found that the logistics industry fostered by international trade has replaced California’s long lost manufacturing base in terms of providing good paying jobs.
Unfortunately, because of regulatory infighting and competing political agendas, California is unable to develop port projects or the supporting inland infrastructure needed to meet the future growth trends of international trade and the modernization that will improve efficiency and environmental protection.
The international trade community is finding willing partners and moving ahead with development projects in states like Virginia, the Carolina’s, Georgia, Florida, Alabama and Texas. We have seen the development of projects and expansion of facilities in Canada and Mexico – all in an effort to provide alternative gateways to California. The investments in these other locations are being made now.
Pie In The Sky
California voters are going to face dozens of statewide and local ballot propositions in November. Without question the strangest and most implausible of all the measures is a local initiative in San Diego – Proposition B. If enacted, this fantasy island in the sky would allow for the construction of a 100 acre deck suspended over a marine terminal.
The deck would supposedly support the construction of a football stadium and hotel facility on top of a working marine terminal. Underneath the hundred thousand people attending football games would be ships unloading cargo, trucks, fork lifts moving back and forth along with a jet fuel storage facility (barbeques at tailgating parties would be strongly discouraged).
Sound too incredible to be true? Unfortunately not. Interestingly, the proponents of Proposition B have managed to unify just about everyone in San Diego against this measure. Labor unions, the entire local Congressional delegation, environmental groups, chambers of commerce, mayors, city council members, the San Diego Union-Tribune, taxpayer associations, international trade organizations, retired military leaders, the California State Lands Commission and academics are all opposed to this measure.
Dysfunction Junction
I attended a debate between two candidates running for the Assembly. My assemblyman has been termed out and it is an open seat. The debate was well attended and took place at a local school. Being that I live in a small town, over the years I have come to know both candidates. They are both good people. Both hold local offices, are well respected in the community and viewed as successful public officials.
The debate was civilized and was more an exchange of ideas than a debate or clash of different positions or philosophies. The focus of the debate was on children, including education. I have two daughters in public school, one of whom is autistic – and with a daughter in special education, I have witnessed both the best and worst that our public school system has to offer.
Interestingly, a lot of the questions raised at the debate by the audience focused on how the Legislature works (or doesn’t work) in Sacramento and the adverse implications for our children. Both candidates claimed that they would work hard to solve the State’s budget crisis. Both promised to “reach across the aisle” and work in a bipartisan fashion. Both cited the Nicole Parra banishment and promised that our children would come first and they would have no problem voting against the leadership of their respective political party.